Puppet Masters of Industry
The price of one bed night 10 years ago could help hoteliers buy one tin of paint to maintain the high standard at their accommodation venue. Today a week's worth of accommodation is needed to buy a tin of paint. It would seem purchasing power per room has decreased and mixed signals from government departments is causing hoteliers untold nightmares in financial forecasting. Their attention has moved from their guests to simply keeping their operations running on a day to day
In an attempt to play ball the Chief Executive of the Zimbabwe Tourism Authority, Keith Kaseke, issued a statement to the tourism industry, Notice 07/2007, in which it stated a schedule of prices that the industry could charge for accommodation, food and beverages. Dinner is pegged at ZWD$3,700,000 for a 5star resort. That equates to about Â£1 on the parallel market. Accommodation per night at a 5star resort, pegged at $ZWD18,950,000 is roughly Â£4 which in comparison to international standards is well below par. Once stocks have been used up for guest new supplies need to be sourced from across the border and paid for in full at a normal prices in foreign currency. Business owners then need to hedge their pricing to sell their services in Zimbabwe dollars at a price that they can repurchase more foreign currency on the black market to reorder more goods. All the while doing so with 8,000% inflation in mind, price controls and trying to make a profit.Â
In September the Reserve Bank said tourism would be exempt from price control because it was not a basic commodity. Nothing has been done. Hoteliers with Foreign Currency accounts are allowed to keep 65% of their own money in foreign currency.Â Last month a statement was issued saying all Foreign Currency Accounts would be liquidated into Zimbabwe dollars at the Bank’s set rate if account holders did not use their foreign currency within 30 days. Understandably there was a mad scramble to spend all the foreign currency reserves the hotels had because the did not want their USD to be exchanged at ZWD$30,000 to one dollar when the black market rate for transfer is sitting around ZWD$1,600,000. Today’s Business Herald sated the Bank had revised its policy and account holders can now retain 65% of their export proceeds in their Foreign Currency Accounts for an indefinite period. Business owners sighed with relief, but only after being forced to spend what they had unnecessarily.
There is only so long you can tread water in a storm before you sink. While the ministers of office could be having fun playing a splendid game of fetch with the Tourism industry, it will eventually be too much effort to turn back for another onslaught of haphazard economic direction and one by one operators will roll over and play dead, and then the government coffers will have 35% access to FCA accounts with a nil balance. Maybe then they’ll stop throwing the stick.
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